Want to learn how to invest in gold so you can achieve portfolio diversification and put your money behind a tangible asset? You aren’t alone. Recent market volatility and rising gold prices have encouraged many people to explore gold investment options. However, if you are a first-time gold buyer, you likely have lots of questions, like “Is now a good time to buy gold?” and “How should I invest in gold?”
Our gold IRA buyers guide will answer questions like “What is a gold IRA?” and explore other ways to add gold to your retirement portfolio. Here’s everything you need to know.
When Is a Good Time to Buy Gold?
When is a good time to buy gold? Now.
The market has been volatile, and gold prices have remained relatively stable after recently hitting an all-time high. More importantly, the demand for gold in various industries is skyrocketing. A few sectors that need gold include the following:
- Electronic device manufacturers
- Healthcare equipment manufacturers
- Aerospace companies
The demand for gold and other precious metals isn’t going away anytime soon. If anything, the demand will likely increase.
Why Invest in Gold?
Gold has been a symbol of wealth and security for centuries. But why should you consider it as part of your financial strategy? By investing in gold, you can:
Diversify Your Portfolio
Stock market fluctuations can make your financial future feel uncertain, especially if your portfolio is heavily focused on a single industry or a handful of companies. While stocks and bonds can fluctuate during times of high inflation, gold tends to maintain its value during economic downturns.
Adding gold to your portfolio can help create a safety net that reduces your overall risk exposure. However, you shouldn’t make your portfolio too heavily skewed toward gold alone. You can add other precious metals to your portfolio and maintain a good balance of stocks as well. Diversification is the goal.
Hedge Against Inflation
The value of paper currencies declines as the cost of living increases. Recent events have also made some question the strength of the U.S. dollar. Gold, however, tends to retain its purchasing power. This makes it a good hedge against inflation, helping you maintain the value of your wealth over time.
That’s not to say that gold is inflation-proof. However, it has proven to be very resilient.
Support Your Wealth-Building Goals
Gold is a long-term investment. Physical gold acts as a store of value and can play a crucial role in achieving your wealth-building objectives. Gold mutual funds and exchange-traded funds (ETFs) function similarly to stocks and can be an easy way of diversifying your portfolio.
Gold IRAs are another way to use precious metals to support your wealth-building goals. These precious metal investments allow you to purchase gold with pre- or post-tax dollars. The gold is kept in an IRA-approved account and held there until you reach retirement age. The account yields gains in the form of gold appreciation. As the gold you invest in rises in value, the value of your IRA account increases too.
5 Ways to Invest in Gold
As a first-time gold buyer, you may be surprised to learn how many different options you have for purchasing gold. Here are five of the most popular ways to invest in gold, as well as the benefits and potential disadvantages of each approach:
1. Bullion
Gold bullion is highly refined or pure gold, such as gold bars. The bars must be at least 99.5% pure to be considered bullion, but some are as much as 99.9% pure. Buying gold bars and bullion coins is a time-tested method of investing in precious metals. You can purchase gold bars and store them at home or arrange to have them stored in a depository. Here’s a look at the good and bad of buying gold bullion so you can make an informed decision.
Benefits of Bullion
The most appealing aspect of buying gold bullion or bars is that you can physically own and store it. You will have direct control over your investment, which gives many investors peace of mind in the current uncertain times.
Additionally, gold bullion is pure. As long as you purchase your bars from a reputable gold group, you can have confidence that it meets or exceeds the purity levels stamped on the bar. Gold bullion is also universally recognized as a valuable commodity, which makes it extremely liquid in the event you need to sell your gold holdings.
Disadvantages of Bullion
Gold bullion and bars do have a few drawbacks. A large reserve of gold bars can be quite heavy and cumbersome to store. If you are going to keep your gold at home, you’ll need to invest in a high-quality safe to protect your investment. If you decide to store your gold in a safety deposit box at your local bank, you’ll incur storage fees and setup fees.
The initial cost of buying bullion can be quite high, especially when the price of gold is at its peak. Additionally, large bars may be harder to transport or divide.
Additionally, buying physical gold does not offer any tax benefits. You’ll have to use post-tax dollars in most instances, and you won’t be able to claim your purchases as tax-deductible investments.
2. Gold Coins
Gold coins are popular options among collectors and investors. The American Eagle and Canadian Maple Leaf are some of the most well-known gold coins. These coins provide intrinsic value based on the amount of gold that is used to make the coins. They are also collectibles, which means that they can be worth much more than the fair market value of the gold.
Gold and silver coins vary greatly in terms of collectible value. Rare coins and limited-production pieces tend to be the most valuable. However, the value of specific coins fluctuates over time.
Benefits of Gold Coins
Gold coins provide some benefits compared to larger gold like bullion or bars. They are smaller and easier to buy. They are also easier to trade and sell. If you are going to invest in a large quantity of precious metal coins, you will still need a small home vault or safe to provide your investment with a safe haven. However, they take up far less space, and this can reduce your total storage costs.
Gold coins are also extremely liquid. There is a broad market of potential buyers, which means you could offload your coins relatively easily if you needed to sell them in a hurry. The historical or artistic value of gold coins adds to their appeal. If you are looking for collectibles that double as an investment tool, gold coins can be a good choice.
Disadvantages of Gold Coins
There are certainly some drawbacks to gold coins. Most notably, coins often cost more than their bullion content due to minting fees. If you want to get your hands on a highly sought-after coin or collection, be prepared to pay top dollar.
Additionally, gold and silver coins are often counterfeited. Make sure you verify the authenticity of any coins before investing in them.
Like bullion and other forms of physical gold, coins don’t offer any tax advantages. They can be fun to collect, and they typically grow in value over time. However, appreciation is the only way they can grow your wealth.
3. Mutual Funds and ETFs
If you would prefer to avoid the headache of owning and storing physical gold, mutual funds and ETFs offer an alternative. Each share of an ETF represents a set amount of gold, such as a quarter of an ounce. You can trade ETFs much like stocks. You can buy or sell them using a self-directed IRA or brokerage account.
Mutual funds own gold companies and gold bullion as part of their portfolios. By investing in a mutual fund that has a stake in gold companies, you can indirectly participate in the gold market. However, very few mutual funds focus exclusively on gold. Most mutual funds have diversified portfolios that include other commodities.
Here are the pros and cons of mutual funds and ETFs:
Benefits of Mutual Funds and ETFs
Both ETFs and mutual funds provide you with easy access to gold investments. You can use your existing IRA or brokerage account to buy and sell shares. Since you can buy shares or fractions of shares, the startup costs are very low. If you aren’t signed up with a brokerage and don’t have a self-directed IRA, simply set up a new account on any platform that includes gold-based ETFs and start trading.
Mutual funds and ETFs are also low maintenance. You won’t have to consider storage options or setup fees. Additionally, you can use these resources to invest in a range of gold-related assets.
Disadvantages of Mutual Funds and ETFs
The biggest drawback of this approach is that you don’t actually own any gold. You own shares in a fund that owns gold or stock in a gold company.
You may also incur ongoing management fees, which can eat into your returns. If the fees are flat-rate charges, they can have a disproportionate impact on smaller portfolios. Mutual funds and ETFs are also subject to many of the same market fluctuations as stocks, especially if the fund includes other assets.
Mutual funds and ETFs certainly have some benefits, but the process works a lot like buying stocks. If your goal is to grow wealth and promote long-term stability, you need to diversify your portfolio.
4. Jewelry
Gold jewelry is another way to invest in gold, though it’s less common for serious investors. There are just too many variables in gold purity and quality, and there are also authenticity concerns.
Benefits of Jewelry
There are a few potential advantages of investing in gold jewelry, such as the dual purpose of high-quality jewelry. These items provide an aesthetic appeal and an investment value.
Gold jewelry is also easy to carry and transfer. It may be easier to sell than collectible coins. However, it can be hard to establish a fair market value due to varying opinions about the aesthetic appeal of a piece of jewelry.
Disadvantages of Jewelry
There are some serious concerns associated with investing in gold jewelry. Products are typically subject to high markups due to labor and design costs. Additionally, jewelry that is frequently worn may be prone to damage and lose value over time. It can also be difficult to recoup the full value of your investment when you sell gold jewelry.
The bottom line is that there are too many variables associated with gold jewelry to make it a viable gold investment strategy. There’s nothing wrong with buying gold jewelry for aesthetic reasons, but you shouldn’t rely on it as a wealth-building tool.
5. Gold IRAs
A gold IRA is a self-directed individual retirement account that allows investments in physical gold and other precious metals. You can set up either a traditional or Roth gold IRA.
Gold IRAs can also be funded with either pre-tax or post-tax income. If you set up a traditional gold IRA, you’ll use pre-tax money to fund your account. This strategy can lower your current taxable income and may even push you down into a lower tax bracket (depending on how much you make and contribute). Your money will grow in the tax-deferred account, and you won’t pay income tax on it until you make withdrawals.
A Roth gold IRA uses post-tax dollars. This means your money will grow tax-free. You won’t pay taxes on your Roth gold IRA withdrawals as long as you wait until retirement age to start pulling out money.
Learn more about the benefits and disadvantages of opening a gold IRA investment account:
Benefits of Gold IRAs
Custodians will handle your IRA. This helps promote compliance and simplifies storage. Investing in a gold IRA can add stability to your retirement savings.
You’ll also enjoy tax advantages either now or when you withdraw from your IRA account. If you set up a traditional IRA account, you’ll use pre-tax money to buy gold. Your investment can grow tax-free until you reach retirement age and make a withdrawal. You’ll be taxed on your IRA funds during each withdrawal.
If you set up a Roth IRA account, you’ll use after-tax dollars to buy gold. This means you won’t have to pay taxes again when you withdraw money from your account, as long as you reach retirement age, of course. If you pull funds out before retirement age, you’ll incur early withdrawal penalties.
Disadvantages of Gold IRAs
Gold IRAs are subject to strict IRS rules. You’ll need an IRA custodian who understands these rules. You’ll also need to ensure your gold is stored in an approved facility to comply with IRS regulations.
Gold IRAs do involve some storage and setup costs. However, if you work with one of the best gold IRA companies, such as Noble Gold Investments, you can avoid exorbitant fees and make the most of your investments. Noble Gold Investments partners with an IRS-approved depository to keep gold safe.
Physical Gold vs. Gold IRAs
Of all of the different gold investing options, purchasing physical gold and starting a gold IRA are two of the most appealing choices. Physical gold gives you full ownership and control and high liquidity but offers no tax benefits. Gold IRAs offer tax-deferred or tax-free funding options and moderate liquidity, but a custodian will have to manage your account.
How Do I Decide Which Gold Investment Is Right for Me?
This gold IRA buyers guide has plenty of great information to help you start exploring different gold investment options. However, it’s important to consider your individual wealth-building goals. Most importantly, think about which option will be the safest and easiest to manage. For most people, buying physical gold and opening a gold IRA are the two most appealing options.
Here’s a closer look at how to buy physical gold and how to open your own gold individual retirement account.
How to Buy Physical Gold
Are you interested in purchasing physical gold? If so, here’s what you need to do next:
Research Dealers
Do your homework to identify reputable gold companies. There are several established dealers out there, but there are also lots of scammers. Be diligent and focus on companies like Noble Gold Investors. Our firm has served clients for over 20 years and offers Gold IRAs as well as at-home storage and investment options.
Understand Pricing
Gold prices typically include spot pricing plus a premium. Familiarize yourself with how this pricing system works so you can get the best deal possible. If you have questions about spot pricing, reach out to a reputable dealer like Noble Gold Investors. We will be happy to break down the purchasing process and find an investment strategy that fits your budget.
Verify Purity
Check for certificates of authenticity and purity. If you have chosen a reputable dealer, you can enjoy peace of mind knowing that your gold meets purity standards.
Choose a Storage Method
Decide where you want to keep your gold and how you will protect it from theft. If you are going to store it at home, invest in a high-quality safe and use a discreet delivery service like Noble Express to keep your purchase private. Alternatively, you can store your gold at a depository or your local bank.
Insure Your Gold
Make sure you take out an insurance policy on your gold, especially if you are storing it at home. Talk to your insurance agent to identify a policy that will protect against theft, loss, and other incidents.
Dos and Don’ts for Investing in Gold
If you’re ready to start investing in gold, keep these dos and don’ts in mind:
Dos
Make sure to:
- Educate Yourself Fully About the Market: Recognize how interest rates, economic trends, and geopolitical events can impact prices
- Diversify the Metals You Invest In: To reduce risk exposure and benefit from varied market dynamics, invest in a mix of gold, palladium, platinum, and silver
- Research Dealers: Only work with dealers who have a solid reputation with past customers and the Better Business Bureau, as well as accreditation
- Craft a Plan for Secure Storage: If you’ll be purchasing physical metals, shop secure safes for home storage or professional vault services
- Learn About Precious Metal IRAs: These tax-advantaged retirement accounts can help you invest in gold and silver, but it’s important to understand the rules before creating a new account
- Understand Liquidity: Make sure any assets are in forms that are tradable and widely recognized, making it easier to sell your metals when the time is right
Don’ts
Avoid the following mistakes:
- Making Emotional Decisions: Like any investment, you’ll want to refrain from impulsive choices driven by hype or fear — instead, keep your long-term objectives in mind and follow a strategic plan
- Ignoring Tax Implications: Research any tax responsibilities you might have upon buying, selling, or holding precious metals, especially when working with retirement accounts like IRAs
- Expecting Quick Profits: Precious metals are best used to hedge against inflation or uncertain market conditions, rather than being treated as a get-rich-quick investment
- Purchasing Low-Quality Metals: It’s typically wise to avoid collectibles and numismatics unless you have specific expertise in the field — instead, purchase investment-grade metals
- Falling for Scams: Watch out for deals that seem too good to be true or unlicensed dealers attempting to sell “rare” coins
- Neglecting a Balanced Portfolio: Even though precious metals can add value to your portfolio, it’s never a good idea to allocate all of your resources to one asset class
With these things in mind, you can reduce your exposure to risk while investing in gold.
How to Start a Gold IRA
If you want to start a gold individual retirement account, you’ll need to do the following:
Select a Custodian
Step one involves identifying an IRS-approved custodian to manage your account. Noble Gold Investors is an IRS-approved company and is authorized to manage gold IRAs on behalf of clients like you. We have two decades of experience and an exemplary reputation for doing business with transparency.
Fund the Account
Next, you’ll need to fund your account. You can use a rollover or start contributing directly to the account using pre- or after-tax dollars (varies depending on your IRA type).
A gold IRA rollover allows you to move funds from an eligible retirement account to your new account. You may be able to move funds from a 401(k), pension plan, or traditional IRA. Make sure to speak to financial advisors who are experienced with this type of rollover.
To maximize your tax benefits, strive to fund your account up to annual contribution limits. The more you put into your account, the faster it will accumulate value.
Choose Gold Products
Decide what gold products you want to invest in. Noble Gold Investments offers a selection of bullion as well as gold, silver, platinum, palladium, and rare coins. This makes it easy to create a diverse portfolio of precious metals.
Store Gold in Approved Depositories
You are required to store gold in an IRS-approved depository to receive IRA tax benefits. Noble Gold Investments partners with a secure depository to ensure compliance.
Monitor Your Investments
All that’s left to do is monitor your IRA account and continually contribute so you can build wealth. As the price of gold rises, the value of your account will increase.
Ready to Invest in Gold? Partner With Noble Gold Investments
Has this gold IRA buyers guide got you excited about the opportunity to launch your own gold-based individual retirement account? If so, Noble Gold Investments is just the partner to help you open your first gold IRA account. For over two decades, Noble Gold Investments has provided clients like you with an easy and safe way to open a precious metals IRA.
As one of the most trusted gold IRA companies, we know how to support your retirement savings goals while providing safe, discreet service. In addition to offering gold IRAs, we also offer silver IRAs and other investment opportunities, such as palladium coins. Our hands-on process combines client education and wealth preservation strategies that are centered around your financial goals. Open an account today or request a copy of our free gold IRA kit.
